JLN Options: TABB on US Options Trading: Low-Touch on the Rise

May 16, 2012

Lead Stories

TABB on US Options Trading: Low-Touch on the Rise
Over the past year, investment managers tell TABB, a number of important recent changes affecting their US options trading are not only short-term drivers – but long-term catalysts, says TABB Group.
Speaking to preliminary analysis drawn from TABB’s soon-to-be-published annual US options trading study (currently in editing), Matt Simon, TABB NY senior analyst and co-author of the new 2012 benchmark study with Andy Nybo, head of derivatives, says that when he backtracked through hours of transcripts from interviews with 54 traders at US hedge funds, asset managers and prop trading shops as to what had changed the most in options trading during the past year, he believes that over the past year, many important changes in options trading are not only short-term drivers – but long-term catalysts.
(Editor’s note: the TABB Group 2012 Options Trading Study will examine the many factors influencing how and where buy side firms are trading options, including the growing adoption of electronic trading tools, the factors that influence the buy-side’s choice of broker-dealer relationships and the impact their behavior will have on sell-side options desks into 2013 and beyond.)
http://jlne.ws/KQ5c1Q

STATEMENT BY WILLIAM J. BRODSKY, CHAIRMAN AND CEO, CBOE HOLDINGS, INC. ON ILLINOIS PENSION REFORMCHICAGO, May 16, 2012 – William J. Brodsky, Chairman and CEO of CBOE Holdings, Inc. (NASDAQ:CBOE), today issued the following statement regarding Illinois pension reform:
“CBOE Holdings joins the Illinois State Chamber, the Civic Committee of the Commercial Club of Chicago, the Civic Federation and others in support of a call to action to reform Illinois’ pension laws and review Medicaid policy this legislative session.”
“Attracting and retaining growing businesses and quality jobs in Illinois requires us to address what is crippling the state’s finances. The current structure of our pension system is flawed, and it continues down an unsustainable path that will lead to dire results. Pension reform is needed now so employees and residents in the State of Illinois are fiscally secure.”

Chicago Board Options Exchange and China Financial Futures Exchange Sign Memorandum of Understanding The Chicago Board Options Exchange (CBOE) and the China Financial Futures Exchange (CFFEX) announced today that they signed a Memorandum of Understanding (MOU), which establishes an open channel of communication and lays the foundation for future collaborative efforts between the exchanges. Executives from both exchanges signed the MOU today at a ceremony in Beijing, China.
http://jlne.ws/MkMj9t

UPDATE: China Financial Futures Exchange Expands Collaboration Efforts
WSJ.com
–China Financial Futures Exchange expands collaboration efforts
–CFFEX signs memorandum of understanding with NYSE Euronext
–CFFEX signs memorandum of understanding with Chicago Board Options Exchange
(Updated to include agreement with Chicago Board Options Exchange.)
By Melodie Warner OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The China Financial Futures Exchange will collaborate with NYSE Euronext (NYX) and the Chicago Board Options Exchange to develop futures and options markets in Europe, the U.S. and China as they look to extend the exchanges’ global reach.
Under the memorandum of understanding, the exchanges will explore opportunities for information sharing; exchange and train employees; and cooperate on joint research into developing strategies for the derivatives market.
CBOE, the largest U.S. options exchange and creator of listed options, said the agreement also creates the opportunity for potential joint marketing efforts and product development.
http://jlne.ws/LSY8ks
Sallie Mae Puts at Five-Year High Amid Loan Scrutiny: Options
2012-05-16 07:56:26.453 GMT
By Cecile Vannucci and Nikolaj Gammeltoft
May 16 (Bloomberg) — SLM Corp. bearish options prices have reached the highest level in almost five years relative to bullish ones, pushed up by traders concerned the U.S. government will take action to prevent a bubble in education loans.
Puts protecting against a 10 percent drop in the largest private student lender cost 1.33 times more than calls betting on a 10 percent gain, according to data on three-month options compiled by Bloomberg. The price relationship reached 1.35 on May 11, the highest level since October 2007. SLM shares have dropped 18 percent since reaching a seven-month high in March.
BGC Partners Appoints Michael A. Riffice as Managing Director and Head of Futures and Options, AmericasBGC Partners, Inc. (NASDAQ: BGCP) (“BGC Partners” or “BGC”), a leading global brokerage company servicing the wholesale financial and property markets, today announced the appointment of Michael A. Riffice as Managing Director and Head of Futures and Options, Americas.  In this role, Mr. Riffice will be responsible for spearheading the growth of BGC’s futures and options business in the Americas.
http://jlne.ws/Ml1xeB

VIX Goes Vertical: 43% Price Objective (VXX, TVIX, VXZ, XVZ)
Wall Street Sector Selector
VIX, the CBOE S&P 500 Option Volatility Index, also known as the “fear  indicator,” breaks out.
The VIX index is up 54% from its March 26th low and today registered a point and figure chart “double top breakout” which is a strong “buy” signal and the index now has a price objective of 31.5 which is 43% above today’s closing price.
http://jlne.ws/L7aYc5

EXCHANGES

STATEMENT BY WILLIAM J. BRODSKY, CHAIRMAN AND CEO, CBOE HOLDINGS, INC. ON ILLINOIS PENSION REFORM 
CHICAGO, May 16, 2012 – William J. Brodsky, Chairman and CEO of CBOE Holdings, Inc. (NASDAQ:CBOE), today issued the following statement regarding Illinois pension reform:
“CBOE Holdings joins the Illinois State Chamber, the Civic Committee of the Commercial Club of Chicago, the Civic Federation and others in support of a call to action to reform Illinois’ pension laws and review Medicaid policy this legislative session.”
“Attracting and retaining growing businesses and quality jobs in Illinois requires us to address what is crippling the state’s finances. The current structure of our pension system is flawed, and it continues down an unsustainable path that will lead to dire results. Pension reform is needed now so employees and residents in the State of Illinois are fiscally secure.”

ISE extends helping hand to legging strategies
thetradenews.com May 14, 2012
The International Securities Exchange (ISE) has introduced a new order type, implied orders, which it claims will significantly enhance the execution of multi-legged strategy orders on its exchange. Multi-legged strategies are often used to help hedge risk, especially when trading higher priced stocks. Previously, multi-legged strategies operated on the ISE’s complex order book, but were not accessible to participants on the regular order book. Now the ISE has introduced implied orders, also known as legging orders, market participants can trade the individual legs from the complex order book on the bourse’s regular order book for the first time.
http://jlne.ws/KPC8re

UPDATE: Boerse CEO Confirms Growth
Goals Despite Subdued Start
— Company says 2012 growth, expense targets unchanged despite subdued first quarter
— First annual meeting since EU blocked NYSE Euronext tie-up
— Company considers EU’s derivatives market definition wrong.
By Ulrike Dauer Of DOW JONES NEWSWIRES
FRANKFURT (Dow Jones)–Deutsche Boerse AG (DB1.XE) Wednesday said the German exchange operator’s 2012 growth and expense targets remain unchanged, despite a subdued first quarter, shareholders convene for the first time after the failed merger with U.S. peer NYSE Euronext (NYX).
“The current year has begun modestly due to the on-going lack of confidence among market participants,” Chief Executive Reto Francioni told the annual meeting. “This does not mean that we are losing sight of our growth targets.”
For 2012, Deutsche Boerse targets net revenue of EUR2.15 billion to EUR2.3 billion, equivalent to a rise of between 2.4% and 10% from the 2011 figure of EUR2.1 billion, which had been the highest level in the company’s history since 2008.

STRATEGY

Why You May Want to Wait Before Trading Facebook Stock
NASDAQ.com
By Jeff McAllister, VP of Education, OptionsANIMAL
When an IPO creates as much excitement and fanfare as Facebook (NASDAQ ticker symbol: FB), it’s tempting to jump right in and buy the stock. But, if you are an option trader, you’re going to have to wait.
It seems that every news channel, blog, or investment program mentions the Facebook IPO at least once every 30 minutes. The IPO is now expecting to price between $34 and $38 per share and is going to be a volatile one. I suspect that the trading range for opening day will be significant.
http://jlne.ws/IZyfxH

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